What You Need to Know About Child ID Theft

In the upcoming comedy Identity Thief, Jason Bateman plays a mild-mannered businessman who learns that a harmless-looking woman has stolen his identity. It looks hilarious.

But ID theft is no laughing matter to the millions of Americans whose lives are turned upside-down by it.

And now, we’re learning that even our kids aren’t safe from ID theft. I covered this topic just before school started, but since then, it’s mushroomed into an epidemic, if new research is to be believed.

That information comes by way of Javelin Strategy & Research, which has studied adult ID theft for many years. After the FTC sounded the alarm bells on child ID theft problems, Javelin followed up with its own research.

The findings aren’t fodder for a February comedy. In fact, they read more like a horror movie.

The study of more than 5,000 households with children sought to learn more about child ID theft. Here are a few things you need to know:

It happens a lot more than you think.

1 in 40 households surveyed have had a child victimized by identity theft.

You may know the thief.

Close to one-third of the respondents (27 percent) say the perpetrator of the child ID fraud was someone they knew personally.

They’re not after your money.

More than half of the respondents (55 percent) said the criminals used the child’s information to commit non-financial fraud, including renting housing, obtaining employment, committing tax fraud, and evading law enforcement.

They’re coming for your kid’s SSN.

Social Security numbers are the most sought-after and valuable piece of information criminals target for child ID fraud, according to the study.

Now what?

One of the most interesting findings of the survey involved what the criminals did once they had a child’s Social Security number. A minor’s ID isn’t valuable per se because of his or her age.

So the bad guys create something called Synthetic IDs, in which they combine a minor’s Social Security number with an adult’s date of birth and address to create an entirely new and fabricated identity.

Synthetic ID theft accounts for more than 80 percent of ID theft, according to the FTC, and it’s worse than regular ID theft, because it’s harder to track. Synthetic ID theft creates a “fragmented” or “sub-file” to your main credit file.

That fragmented file refers to additional credit report information tied to your Social Security number, but someone else’s name and address, according to a recent report by the FTC.

Negative information entered in the fragmented file is then linked to you, but doesn’t actually belong to you.

If you have good credit but there is derogatory information in the fragmented file, it could negatively impact your ability to get credit, but it doesn’t affect your child’s main credit file.

This is a troubling trend, and if you have kids you’ll want to keep a close watch on who has their personal information and how it’s being used — including schools, summer camps, extracurricular activities and, yes, your friends and family.

Your child’s first memory as a consumer shouldn’t be recovering a stolen identity.

Christopher Elliott is a consumer advocate who blogs about getting better customer service at On Your Side. Connect with him on Twitter and Facebook or send him your questions by email.